1)

Massey Ferguson operates as a producer of farm machinery, industrial machinery and

diesel engines. In these types of industries are many SMEs (small and medium-sized
enterprises) and MNEs(multinational enterprises), as Massey Ferguson, present. As a
result there is a high level of competition in these markets. Massey Ferguson has to
suggest against those other types of players.
Furthermore these types of industries are dependent from other economical
circumstances. Economical and political crisis, as 1980, have direct influence into sales
and so to the financial situation of Massey Ferguson. To solve those situations the
management has to forecast such critical situations and make the right management
decisions. In our opinion the companies needs a solid/good financial standing to still be
able to react to changing demands during external crisis and market fluctuations.
As a big player it is necessary to use the existing advantages against the SMEs, which are
locally more connected to their customers and could benefit from these reason.
MNEs should offer their customers special financing options (for example with legal
entities) and consequently be more independent from the external interest rates.
In addition the MNEs should use the economies of scale and standardize their
production to reduce their costs and increase their gross margin per unit.
A problem for the bigger players and especially for Massey Ferguson is the distance
between production and sales. Due they are located in different countries the companies
are at the mercy of the exchange rate und currency fluctuations. A Problem with the
local SMES dont have to struggle with. An approach to this problem could be to connect
production and sales more regionally.
2)
Massey Fergusons strategy includes delivering SMEs and MNEs all over the world with
a full range of product line. Even if they were successful in 3rd world or developing
countries there is no precise positioning about their product market strategy. Massey
Fergusons main business is the B2B sales, but sometimes they were also participating in
the B2A sector e.g. they made a contract to modernize and improve Polands tractor and
diesel engine industry. The other two leading companies are more concentrated to the
big North American Market and try to increase there market share over there.
According to our opinion the management should follow a consequent strategy rather
than try to deliver all markets with every products all over the world.
Massey Ferguson and Deere & Company were only focusing on agricultural sales
whereas the 3rd big enterprise, International Harvester, has 59% (1-2,262$m/5,498$m)
of its sales in other business areas.
Back in 1975 Massey Ferguson tried to introduce new, high-powered hp tractors to the
North American Market. Many unfortunately circumstances happened and so their
project failed. The management missed in the years before to invest in marketing and
R&D of high-powered tractors in Europe and North America, even if those markets
generate together approximately 60-70%* of their sales.
The competitors have most of their assets in North America and so a shorter distance to
deliver those markets than Massey Ferguson. Massey Ferguson should have moved their
production facilities from England to North America before they were introducing their
new product line to this market. So they would have been closer to their point of sale.

Another important reason was the strong pound, which made exporting more expensive
and declined the profit margin. As a result the competitors had a higher profit margins
per unit as Massey Ferguson and even could sell their products for a lower price.
Before and during the introduction of the new product line in the NA market, Massey
Ferguson miscalculated the environmental issues and their own crippled financial
situation. Consequently of these doubts customers and distributors lost there believe in
these products and sales eroded and the distribution network shrinked by 50%.
Massey Ferguson missed to adapt their strategy over the time to changing
environmental conditions. It is very important to react adequate to altered markets and
in our point of view they missed reorganize their company to the new, upcoming
demands as well as political and environmental circumstances.
*Used date of 1980 (35,5%+29,6%=65,1%) estimate the percentage of sales for the years before